Tribunal rules in favor of taxpayer for AY 2008-09 and 2009-10

The Tribunal allowed the appeal for AY 2008-09 and partly allowed the appeal for AY 2009-10. It directed the application of a 5.24% Net Profit rate for both years and deleted the addition of Rs. 2,00,000 for AY 2009-10. The Tribunal emphasized the Rule of Consistency and the lack of evidentiary value of statements made during surveys without corroborative evidence.

---

---

Issues Involved:
1. Application of Net Profit Rate by the Assessing Officer (AO) and Commissioner of Income Tax (Appeals) (CIT(A)).
2. Addition of undisclosed income based on statements recorded during survey operations.

Issue-wise Detailed Analysis:

1. Application of Net Profit Rate:
The primary issue was whether the CIT(A) was justified in confirming the AO's application of an 8% Net Profit (NP) rate instead of the NP rates declared by the assessee (5.24% for AY 2008-09 and 2.34% for AY 2009-10). The assessee argued that the AO had accepted a 5% NP rate in earlier assessments for AY 2006-07 and 2007-08. The Tribunal noted that the assessee did not maintain books of accounts and the gross receipts were calculated based on bank statements. The Tribunal emphasized the "Rule of Consistency," noting that the AO had previously accepted a 5% NP rate for similar business activities. Given the doubled turnover and the lack of significant changes in business operations, the Tribunal concluded that the 8% NP rate applied by the AO was unjustified. The Tribunal decided that the NP rate of 5.24% should be accepted for both AY 2008-09 and 2009-10, resulting in the appeal being allowed for AY 2008-09 and partly allowed for AY 2009-10.

2. Addition of Undisclosed Income Based on Survey Statements:
The second issue concerned the addition of Rs. 2,00,000 for AY 2009-10, which the AO based on statements made during a survey conducted under section 133A. The assessee had declared an undisclosed income of Rs. 10,00,000 during the survey, which included an estimated profit of Rs. 8,00,000. The AO added the remaining Rs. 2,00,000 as undisclosed income. The Tribunal observed that the total gross receipts had already been taxed and that the addition of Rs. 2,00,000 was not supported by any incriminating material, relying solely on the survey statements. Citing judicial precedents, including the Supreme Court's ruling in CIT V/s Kader Khan (352 ITR 480) and other relevant cases, the Tribunal highlighted that statements made during surveys under section 133A have no evidentiary value without corroborative evidence. The Tribunal concluded that the addition of Rs. 2,00,000 was unjustified and deserved to be deleted, thus allowing the appeal on this ground.

Conclusion:
The Tribunal allowed the appeal for AY 2008-09 and partly allowed the appeal for AY 2009-10, directing the application of a 5.24% NP rate for both years and deleting the addition of Rs. 2,00,000 for AY 2009-10. The order was pronounced in the open court on 07.02.2020.

---